ILLUSTRATION 6. Following are the Balance Sheets of Big Ltd. and Small Ltd. for the year ending on 31st March, 2016. (Figures in crores of rupees) : Big Ltd. 50 Small Ltd. Equity Share Capital-in equity shares of $ 10 each Preference Share Capital-in 10% preference shares of $ 100 each Reserves and Surplus 40 60 200 150 250 250 Loans-Secured 100 100 Total funds 350 350 Applied for : Fixed Assets at Cost less Depreciation Current Assets less Current Liabilities 150 150 200 200 350 350 The present worth of fixed assets of Big Ltd. is $ 200 crores and that of Small Ltd. is $ 429 crores. Goodwill of Big Ltd. is $ 40 crores and of Small Ltd. is 75 crores. Small Ltd. absorbs Big Ltd. by issuing equity shares at par in such a way that intrinsic net worth is maintained. Goodwill account is not to appear in the books. Fixed assets are to appear at old figures. Draft a statement of valuation of shares on intrinsic value basis and prove the accuracy of workings. your
ILLUSTRATION 6. Following are the Balance Sheets of Big Ltd. and Small Ltd. for the year ending on 31st March, 2016. (Figures in crores of rupees) : Big Ltd. 50 Small Ltd. Equity Share Capital-in equity shares of $ 10 each Preference Share Capital-in 10% preference shares of $ 100 each Reserves and Surplus 40 60 200 150 250 250 Loans-Secured 100 100 Total funds 350 350 Applied for : Fixed Assets at Cost less Depreciation Current Assets less Current Liabilities 150 150 200 200 350 350 The present worth of fixed assets of Big Ltd. is $ 200 crores and that of Small Ltd. is $ 429 crores. Goodwill of Big Ltd. is $ 40 crores and of Small Ltd. is 75 crores. Small Ltd. absorbs Big Ltd. by issuing equity shares at par in such a way that intrinsic net worth is maintained. Goodwill account is not to appear in the books. Fixed assets are to appear at old figures. Draft a statement of valuation of shares on intrinsic value basis and prove the accuracy of workings. your
Chapter1: Financial Statements And Business Decisions
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